What is Circular Economy and the Circular Economy Act?
The circular economy is a system where waste and pollution are eliminated, and products and materials maintain the highest possible value through reuse, repair, recycling or composting. This shifts the focus from continuously extracting resources and producing disposable products, thereby reducing pressures on nature and allowing it to thrive and regenerate.
The EU is translating these principles into legislation. The CEA is part of the European Green Deal and a building block of the Circular Economy Action Plan (CEAP). With this Act, the EU aims to:
- Reduce waste;
- Promote recycling and circular business models;
- Strengthen a stable and sustainable supply of raw materials in the EU.
What can you expect from the Circular Economy Act?
The CEA will likely introduce wide-ranging measures that embed circularity throughout the product lifecycle. Whilst the exact scope and legal obligations are under development, the act is expected to:
Stimulate design for circularity
Products may need to be easier to repair, reuse, refurbish, and recycle. Product design may have to consider longevity, modularity and disassembly. With the CEA, the EU may set obligations for product repairability or recyclability.
Implement Digital Product Passports(DPP)
These will likely become a standard for products in multiple industries. The tool would improve traceability by capturing a product’s environmental performance, material composition, and lifecycle data. The EU may introduce transparency obligations for specific product groups, such as electronics, textiles, furniture, automotive and construction.
Strengthen Extended Producer Responsibility (EPR)
EPR schemes may be strengthened, making producers responsible for the environmental impacts of their products. Shifting the responsibility away from waste handlers and consumers to companies that produce and sell products. This could result in financial or operational responsibility for the end-of-life phase of products.
Streamlining & simplification of EU policies
The CEA is also expected to harmonise national requirements, standards and policies across Member States. By reducing the administrative burden, the EU aims to create a common market for waste and facilitate the growth of circular innovations across borders.
How the CEA fits within the bigger picture
The CEA does not stand alone; it’s part of a broader regulatory framework:
Packaging - Packaging and Packaging Waste Regulation (PPWR)
By 2030, all packaging must be recyclable or reusable. Companies may need to redesign their packaging now.
Product design - Eco-design for Sustainable Products Regulation (ESPR)
Nearly all physical goods could have eco-design principles. You’ll need to consider circularity from the design phase.
Raw materials - Critical Raw Materials Act (CRMA)
To reduce the EU’s import dependency on raw materials. This could affect your supply chain.
Waste management - Waste Framework Directive (WFD) & Waste from Electrical and Electronic Equipment Directive (WEEE)
The WFD and WEEE are already the foundational structure for EU waste policy. These may be revised and further reinforced by the CEA.
Together, these form a robust regulatory framework. Any company operating in the EU will be required to operate with greater transparency, accountability, and most of all, circularity.
Who’s most likely to be affected?
The CEA is expected to affect a broad range of industries. Some may feel the impact sooner and more intensely than others, including:
- Packaging
- Electronics
- Chemicals
- Construction
- Transportation
- Textiles
Current regulations already impact these industries due to the raw materials they use and waste created. They may need to adapt quickly to future regulations resulting from the act once it is finalised.
Businesses that wait for complete clarity on the CEA risk falling behind. Complementary regulations on packaging, waste and eco-design are already moving forward. At the same time, investors, customers, and supply chain partners are increasing their expectations around sustainability and circularity. Acting early allows businesses to shape, test, learn, and build, rather than scrambling once obligations become law.
Therefore, any company operating within the EU or serving EU markets should begin preparing for what may become a transformative regulatory shift.
How to prepare your company: Practical steps to get started
Sounds overwhelming? Start by creating insight in your potential obligations, risks and opportunities by following these steps:
Step 1: Map your operations and value chain
Assess and evaluate the existing operations (i.e., your supply chain and waste streams) and product lifecycle. How do you design, source, produce, and manage waste? What happens with your products from sourcing to disposal? Identify areas where waste is generated and opportunities for circularity interventions arise.
Step 2: Assess risks and opportunities
Identify compliance risks for your products, packaging, or services. Establish the baseline for existing circular economy practices and uncover potential opportunities. Are there areas that are particularly vulnerable or ready for innovation?
Step 3: Define ambition and engage stakeholders
Define ambition level with key stakeholders and decision-makers. Engage internal and external stakeholders to set a clear and realistic ambition to improve the circular use of materials.
Step 4: Prioritise and plan
Using the baseline data and information, identify key areas for improvement. Determine the low-hanging fruit for quick wins and map out the long-term, high-impact actions. Build out a strategic roadmap for circular transformation.
Our tip: Get started, even if it’s small
Start with one manageable initiative, like an internal brainstorm on circular ideas, piloting a take-back scheme, or testing out different types of packaging or components for your products. Redesign one product to increase its lifetime. Transitioning to a circular business model does not happen overnight. These early steps will help you test new approaches and learn what works.
How we can help?
At Impact House, we go beyond regulation, data, and mapping; instead, we take a wider strategic view to improving and integrating circular economy practices within your organisation. We provide proactive support and leverage our specialist knowledge to make your business future-proof. Here’s what we offer:
- Strategy: Value chain and waste stream mapping, regulatory scans, risk analysis, identifying opportunities, defining ambitions, and developing your strategic roadmap.
- Implementation: Developing policies, action plans, implementing circular solutions and business models, setting and measuring KPIs, and establishing science-based targets that align with your ambition and objectives.
- Communication & reporting: Internal and external reporting in line with regulatory requirements and stakeholder expectations.
- Tools & technical expertise: In-depth analysis on product level through for example Life Cycle Assessments (LCA) and Environmental Product Declarations (EPD).
Timeline
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The CEA reflects a broader movement in EU legislation. By moving early and integrating the circular economy into your business, you can stay ahead of the curve and turn compliance into a competitive advantage.
Would like to learn more?
Please contact Grant Thornton Impact House for an introductory conversation with one of our circular economy experts.
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